New York Markets After Hours

Plains All American bulks up in Canada

Pipeline firm goes on $2.3 billion shopping spree, buys BP unit

By

SteveGelsi

NEW YORK (MarketWatch) -- Plains All American Pipeline LP on Thursday announced nearly $2.3 billion in purchases, including a $1.7 billion acquisition of Canadian assets from BP PLC as it joins an industry effort to bulk up.

BP
BP, -1.83%
said a subsidiary of Houston-based Plains All American
PAA, +0.14%
will buy its Canadian natural gas liquids business (NGL), which operates in the extraction, gathering, storage, distribution and wholesale marketing of NGLs across Canada and in the midwestern U.S.

Plains CEO Greg Armstrong said the natural gas liquids business will “generate meaningful operating and commercial synergies” by integrating the assets with its existing North American LPG assets and our Canadian crude oil assets and activities.”

Combined with $620 million in four smaller transactions announced on Thursday, Plains said the deals will add to its bottom line and allow it to increase its 2012 distribution growth target to 8% to 9% over its current annualized payment of $3.98 per common unit.

“These four transactions are bolt-on acquisitions and provide an excellent complement to our existing infrastructure,” Armstrong said of the smaller deals.

Shares of Plains All American rose 0.9%. BP shares dropped 0.6%.

Faced with handling increased production from North American oil and natural gas fields, pipeline companies have been pairing up this year in part to cut costs and combine resources to fortify energy infrastructure on both sides of the Canadian border.

Kinder Morgan Inc.
KMI, -0.02%
is buying El Paso
EP
to become the largest pipeline company in the U.S. in a deal valued at more than $20 billion.

As part of the takeover moves, Plains All American Pipeline LP has been trying to buy SemGroup Corp.
SEMG, +0.63%
in a $1 billion hostile takeover.

Among the smaller deals announced Thursday, Plains is buying from Western Refining
WNR, -0.72%
a storage facility in Yorktown, Va., a pipeline system in the Permian Basin of Texas and a pipeline in New Mexico.

Plains All American recently closed the acquisition of 100% of the member interests in Velocity South Texas Gathering LLC from Velocity Midstream Partners, LLC. The assets include approximately 120 miles of crude oil and condensate gathering and transportation pipelines in advanced stages of construction in the Eagle Ford area of south Texas.

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